Wednesday, September 30, 2015

Musings on TPP (2): Drugs

It would be really nice to see a clear statement in the Canadian media of what the TPP issues with regards to pharmaceuticals are. You'll see lots of vague, and sometimes hysterical, statements about extending patent protection, and extending patent life on drugs, but as I read it the key issue is not the length of life of a patent, but the length of the data exclusivity period.

As it stands, patent life on pharmaceuticals is 20 years. Research based drug firms tend to patent very early in the development process for a drug, to ensure that they're not beaten to the patent office on a promising drug by another firm which happens to be doing research in the same direction. That means that (assuming the drug makes it to market, and most compounds which look promising in the early stages of research wash out as the drug trial process proceeds) by the time a drug makes it to market it has much less than 20 years of patent life left - we usually talk about its having seven to ten years left.

Once a drug goes off patent, generic copies can enter the market. The press has always assumed that generics were somehow automatically going to sell at rock-bottom prices: recent American experience, however, has shown that basic economics still applies: give a company a monopoly and it'll exploit it. Generics do have lower costs than brand name drugs (costs, not to be confused with prices) because they don't have to go through the same expensive, multi-year clinical trials process. they just have to prove that they're bioequivalent, meaning basically that they have the same active ingredient as the brand name drug and that that ingredient is released into the bloodstream at the same rate as it is by the brand name drug. Usually that works out OK, although sometimes there are problems.

For a generic firm to prove that its drug is bioequivalent, it has to have access to data on the rate at which the brand name drug's active ingredient is released into the body. The research-based drug companies provide that data to the regulatory agencies as part of the process of getting approval. Data exclusivity, or data protection rules restrict access to this data by requiring that the regulators keep it confidential for a certain period of time. Generic manufacturers can't begin their own drug development until they have access to this data.

At the moment, data exclusivity generally seems to be five to seven years. Whether that makes a difference to the originator drug's period of market exclusivity depends on how many years of patent life are left when the drug gets approval. If there's a good chunk of patent life left at time of approval, data exclusivity shouldn't make much difference to anything. If there's not much patent life left, data exclusivity can make a difference.

You'd think there would be a better way of compensating for differences in the length of the development process than messing with the data protection period. Perhaps the story is different for biologics?